Nearly eight million student loan borrowers are accruing interest on their debt again. The U.S. Department of Education announced in July that interest charges for people enrolled in the Saving on a Valuable Education (SAVE) Plan would resume on August 1.
The income-driven repayment program, which was introduced by the Biden administration in 2023, allowed some low-income borrowers to qualify for $0 monthly payments on their federal student loans, while others could have their loans forgiven outright.
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The Biden White House at the time said that student loan borrowers enrolled in the SAVE Plan who have made payments for at least 10 years and originally took out up to $12,000 are eligible to have their loans automatically forgiven.
Additionally, the White House said for every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments. That means someone enrolled in the SAVE Plan with an original debt of up to $21,000 would have their loans forgiven by the time they reach 20 years of payments.
“For years, the Biden Administration used so-called ‘loan forgiveness’ promises to win votes, but federal courts repeatedly ruled that those actions were unlawful," said U.S. Education Secretary Linda McMahon. "Congress designed these programs to ensure that borrowers repay their loans, yet the Biden Administration tried to illegally force taxpayers to foot the bill instead."
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The Student Borrower Protection Center said it projects that the typical borrower will be forced to pay more than $3,500 per year or $300 per month in interest charges.
“Instead of fixing the broken student loan system, Secretary McMahon is choosing to drown millions of people in unnecessary interest charges and blaming unrelated court cases for her own mismanagement,” said SBPC executive director Mike Pierce. “Every day, we hear from borrowers waiting on hold with their servicer for hours, begging the government to let them out of this forbearance, and help them get back on track—instead, McMahon is choosing to jack up the cost of their student debt without giving them a way out.
